Vehicle tax explained

As vehicle running costs are fairly near the forefront of our minds as motorists right now with eye-watering prices at the pumps, vehicle tax is something that many of us have to factor into our budgets too. But what is vehicle tax? 

To put it simply, all eligible vehicles must legally pay vehicle tax, which is also sometimes referred to as Vehicle Excise Duty, or road tax. This must be paid in order for the vehicles to remain legally on the road, and tax brackets can vary depending on the car you go for. 

What cars do you need to pay tax on?

It’s probably easier to tell you which cars you DON’T need to pay vehicle tax on…

• New cars that produce no carbon dioxide emissions (that’s pure electric vehicles)
• Cars registered between 1st March 2001 and before 1st April 2017 that produce less than 100 grams of carbon dioxide emissions per KM driven. 
• Historic vehicles - that’s cars older than 40! 

If you have a mobility carriage (such as a mobility scooter), receive a war pensioner’s mobility supplement or receive Enhanced Mobility Component of Personal Independence Payment, you may be entitled to free vehicle tax. 

How much is vehicle tax? 

Cars registered after 1 April 2017

You have to pay vehicle tax from when it’s first registered, and this will cover the vehicle for one year. From then on, you’ll pay for either 6 or 12 months at a different rate. 

What you pay for that first year will depend on how much CO2 emission your car produces per kilometre. After that, a petrol or diesel car will cost £165 per year to tax, or £155 for vehicles with an alternative fuel type, such as a hybrid, or a car powered by bioethanol and liquid petroleum gas.

For vehicles with a list price of £40K or more (that’s the published price before any discounts), an extra £355 per year is due - vehicles that produce 0 emissions are exempt from this. You only have to pay this for 5 years from the second tax date. 

Cars registered between 1st March 2001 and 1 April 2017 

The amount of vehicle tax you pay will depend on the fuel type and CO2 emissions of the vehicle, so make sure you check before you purchase a car registered within this window. You’ll find this information on the V5 certificate, or you can search online. 

Tax on vehicles registered before 1st March 2001 is a bit more straightforward, as it’s based on engine size. If the engine size is under 1549, tax for 12 months will cost £180. If it’s over 1549, you’re looking at £295 per year. Simple!

How do I pay vehicle tax? 

You can pay vehicle tax per year, six months, or as a monthly payment. This can be set up as a direct debit, so you can avoid the last-minute panic of renewing.